United States Government Accountability Office Report to the Ranking Member, GAO Committee on Finance, U.S. Senate October 2009 FEDERALLY CREATED ENTITIES An Overview of Key Attributes GAO-10-97 October 2009 FEDERALLY CREATED ENTITIES Accountability Integrity Reliability Highlights An Overview of Key Attributes Highlights of GAO-10-97, a report to the Ranking Member, Committee on Finance, U.S. Senate Why GAO Did This Study What GAO Found Over the years, Congress has GAO identified 219 federally created entities with varied control, missions, and created or authorized the creation operations. These entities, which GAO categorized into 7 types, are not of numerous entities to carry out universally subject to the 12 key broad-based governance, accountability, and federal programs and further public transparency requirements reviewed for this report. These requirements are: purposes. These federally created budget preparation, review, and approval; strategic and performance planning; entities can be categorized into several types and serve a variety of budget execution and funds control; control of improper payments; internal missions. They are subject to control and accounting systems; preparing and reporting of audited financial varying governance, accountability, statements; standards of conduct; whistleblower protection; access to public and transparency requirements records; availability of federal contract and grant information; and access to through which Congress sought to public meetings. For fiscal years 2005 through 2008, Congress appropriated, on strengthen entity operations, average, about $4 trillion a year in federal funds to 129 of the federally created compliance, performance and entities in 4 of the 7 entity types. The table summarizes GAO’s results. resource accountability, and public access to information. Collectively, Applicability of Requirements, Number of Identified Entities, and Percentage of Appropriated these entities receive trillions of Federal Funds by Entity Type dollars annually in funds Entities directly Percent of average appropriated by Congress. General Number of receiving annual appropriated applicability of identified appropriated funds to identified Given the wide variety of entity Entity type requirements entities funds entities Executive types, applicability of key broad- departments Almost all 15 15 73.6 % based requirements, and federal Other executive funding, the committee asked GAO branch entities Almost all 88 79 24.8 % to (1) identify and categorize Government federally created entities by type; corporations Most 23 18 1.5 % (2) determine the extent to which Other federally established the various entity types are organizations No 50 17 0.1 % generally subject to key broad- Nonappropriated based statutory governance, fund accountability, and transparency instrumentalities No 1 0 - requirements we identified; and (3) GSEsa No 3 0 - determine the amount of FFRDCs No 39 0 - appropriations Congress has made Total 219 129 100.0 % directly available to each of the Source: GAO analysis. individual entities in recent years aAs of June 2009, two GSEs are in federal conservatorship and have received commitments of (fiscal years 2005 through 2008). federal support through funds appropriated to the Department of the Treasury and from the Federal Reserve System. To answer these questions, GAO Executive departments and other executive branch entities are subject to almost reviewed federal statutes and all of the 12 key requirements and received, on average, more than 98 percent of regulations, previous GAO and the appropriated funds reviewed. In contrast, nonappropriated fund Congressional Research Service instrumentalities, government-sponsored enterprises, and federally funded reports, data on appropriated funds research and development centers are not subject to the requirements but did not and other budget authority maintained by the Office of directly receive appropriated funds. However, these entities may have received Management and Budget, and other funds from other federal sources via contracts, grants, or other arrangements. relevant manuals, literature and Web sites. In establishing entities and specifying their governance, accountability, and transparency requirements, Congress has weighed a variety of considerations View GAO-10-97 or key components. For more information, contact Susan Ragland such as accountability, economy, efficiency, effectiveness, and entity missions. at (202) 512-9095 or [email protected]; Entities not subject to the specific requirements GAO reviewed may have adopted Susan Poling at (202) 512-2667 or or be subject to other comparable requirements. [email protected]. United States Government Accountability Office Contents Letter 1 Background 4 The Types and Number of Federally Created Entities Are Varied and Large 8 Key Governance, Accountability, and Transparency Requirements Are Not Universally Applicable to Federally Created Entities 24 Many Federally Created Entities Receive Federally Appropriated Funds 35 Appendix I Scope and Methodology 43 Appendix II List of Federally Created Entities with Budget Data 49 Appendix III Relevant GAO Reports 59 Appendix IV GAO Contact and Staff Acknowledgments 62 Tables Table 1: Overview of Entity Types 9 Table 2: Executive Departments 10 Table 3: Other Executive Branch Entities 12 Table 4: Wholly Owned GCCA Corporations 15 Table 5: Mixed-Ownership GCCA Corporations 15 Table 6: Non-GCCA Government Corporations 16 Table 7: Government-Sponsored Enterprises 18 Table 8: Federally Funded Research and Development Centers 20 Table 9: Other Federally Established Organizations 23 Table 10: Specific Governance, Accountability, and Transparency- Related Requirements and Statutes 25 Table 11: Applicability of Specific Governance, Accountability, and Transparency-Related Requirements to the Different Types of Federally Created Entities 34 Table 12: Appropriated Funding to Identified Federally Created Entities for Fiscal Years 2005–2008 37 Page i GAO-10-97 Federally Created Entities Table 13: List of Federally Created Entities with Identified Appropriated Funds for Fiscal Years 2005–2008 49 Figures Figure 1: Appropriated Funding Information by Type of Entity for Fiscal Years 2005–2008 36 Figure 2: Appropriated Funds for Executive Departments (FYs 2005–2008) 38 Figure 3: Appropriated Funds for Other Executive Branch Entities (FYs 2005–2008) 39 Figure 4: Appropriated Funds for Government Corporations (FYs 2005–2008) 40 Figure 5: Appropriated Funds for Other Federally Established Organizations (FYs 2005–2008) 41 This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. Page ii GAO-10-97 Federally Created Entities United States Government Accountability Office Washington, DC 20548 October 29, 2009 The Honorable Charles Grassley Ranking Member Committee on Finance United States Senate Dear Senator Grassley: Numerous federal statutes establish or authorize the establishment of a variety of federally created entities to carry out federal programs and further public purposes. While Congress has assigned much of this work to executive departments, it also has assigned key roles to other types of entities, including private, nonprofit corporations and government- sponsored enterprises (GSE). Collectively, these federally created entities receive trillions of dollars annually in appropriated funds. Over time, Congress has also enacted various broad-based federal reform statutes that establish specific requirements for governance, accountability, and transparency for many federally created entities. Congress enacted these broad-based statutes at different times and for different purposes, and their requirements do not universally apply to all federally created entities. As a result, you asked us to study federally created entities to: 1. identify and categorize federally created entities into related types of entities; 2. determine the extent to which the various entity types are generally subject to key broad-based statutory governance, accountability, and transparency requirements; and 3. determine the amount of appropriated funds Congress has made available directly to each of the individual federally created entities in recent years (fiscal years 2005 through 2008). For purposes of this report, we use the term “federally created entity” to mean an organization established under authority of the federal government that is charged with or has the authority to manage resources and carry out operations or activities that generally advance, involve, or support federal purposes.1 While most of the organizations were created 1 We define an “organization” as an association of individuals working together for common ends under a group identity. For more explanation about these definitions, see app. I. Page 1 GAO-10-97 Federally Created Entities by federal statute, some were created by a person or organization required or authorized under federal statute or regulation to create them.2 We included only organizations that have a discrete identity that is separate and distinct from any other organization (e.g., not components of executive departments, such as the Department of the Treasury’s Internal Revenue Service). As explained